Hierarchical system to be reformed with leadership shift
By Kim Yoo-chul
Amid its ongoing leadership changes, Samsung Electronics said Monday that it will abolish its decades-long rigid corporate structure as it copes with weak demand and increasing competition.
In a statement, Samsung said it will cut its internal ranking system from the current seven levels to four, a move aimed at eradicating a seniority-based evaluation system.
According to the statement, the seniority-based performance system ― Sawon (phases 1, 2 and 3), Daeri, Chajang and Bujang ― will be changed to the four-level Career Level (CL) system ― CL 1, 2, 3 and 4.
Samsung said the company will allow all employees to call each other by their English names, if necessary, to improve communications.
Other changes include holding more internal discussions and meetings online and reducing unnecessary meetings. "These measures are intended to seek faster and quicker policy implementation," Samsung said.
Samsung set a one-hour time limit for internal meetings. All participants are encouraged to speak out about key topics during meetings. "Management is strongly advised to respect the results from internal discussions," it added.
Those changes will take effect next March.
Monday's announcement came three months after the company held a "Startup Samsung" event at its tech compound in Suwon, with workers and executives pledging to abolish hierarchical practices.
These changes reflect Samsung's zeal to remain adaptive and wash off increased investor concerns over corporate sustainability, as most Samsung-identified new business models will be based on creativity and innovative thinking with faster implementation.
Samsung's longtime key advantage lies in manufacturing, for which the company has long been proud of having on-time delivery, output commitment and better pricing.
But amid the world of connectivity and the rise of inexpensive Chinese products, Samsung has been losing its luster as a global manufacturing powerhouse, cornering the firm into preparing imminent action plans to overhaul the culture.
Lately, Samsung has been unexpectedly busy trying to boost management efficiency by selling noncore assets and combining business units with overlapping functions.
The most interesting thing is that Samsung Electronics is on track to understand the latest trends in Silicon Valley by acquiring patents in ventures in areas such as Internet of Things and mobile payment, all of which were identified by the company as being the next corporate growth engines.
"Under the new system, employees who are competitive and report results that hadn't existed before will be promoted regardless of seniority," the company stated.
"A new guideline to evaluate the performance of employees will be set in a few months."
The latest announcement, if realized, will help Samsung to handle necessary changes quickly.
While those changes make sense, some say Samsung is too ambitious and remain doubtful as the longstanding hierarchy has so far made executives feel "inferior" and even "underpaid" compared to executives their age at other companies.
Because the top-down hierarchy system has long functioned as a key integral part of Confucian-oriented Korean corporate culture, some say eradication of the hierarchy system won't be that easy.
Today, Samsung is the world's biggest supplier of memory chips, televisions and smartphones, with the company also being one of the world's top display panel manufacturers.
All of those businesses are cash- and labor-intensive, meaning the old-fashioned management system has been favored by the company.